State action on climate change and greenhouse gas emissions took a leap forward in 2004 with the Regional Greenhouse Gas Initiative (RGGI) in the Northeast. Catalyzed by a 2003 call for collaboration from New York Governor George Pataki (R), nine states— Connecticut, Delaware, Maine, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont—began an effort to cap and then trade carbon dioxide (CO2) emissions from power plants.
Representatives from state environmental and energy agencies met throughout 2004 to hammer out the design details of a market-based “cap and trade” system to reduce CO2 emissions. While RGGI is aimed at emissions from power plants, it could include additional emissions sources and types of greenhouse gases in the future. To launch the program, the states are first developing a “model rule” covering the many facets of an emissions trading system, which must be approved and implemented in each participating state. Completion is anticipated in Fall 2005 with the market becoming operational in 2008.
Analyses undertaken so far, including by WRI and others, will guide recommendations on the design of the system and the level of the cap. The “project offsets” component of the program would allow investors to implement projects that reduce emissions, and then trade the reductions credits to power companies for use in compliance. Similar to the Kyoto Protocol’s Clean Development Mechanism, the RGGI project offsets program will drive investment into clean technologies and will rely on a system of performance standards to evaluate the emissions reductions. WRI was invited by the Northeast States to serve on the RGGI Resources Panel—a team of individuals from respected organizations, agencies, and firms who provide critical technical information and analysis to help construct and implement the trading system. In 2004, WRI helped to convene workshops on critical design issues such as the method for distributing the tradable permits, known as “allocation,” and the use of project-based emissions offset credits.
WRI participated in numerous staff and stakeholder meetings, and prepared a research paper on the performance of state-based emissions trading systems. WRI is currently facilitating the meetings of the heads of the NE State Environment Agencies and Public Utility Commissions which are negotiating the model rule.
State actions such as RGGI are expected to serve as a model for broader emissions controls at the national level in the United States.
